ECB WATCH:BIS Bankers Seen Pondering Deflation Scenarios
In the tranquil setting of Basel, Bank for International Settlement (BIS) members are set to resume a debate about whether to contemplate doom.
Not doom in the usual sense of Armageddon, but in a hypothetical world in which economies are in the grip of falling prices, weak demand, dropping asset prices, and high unemployment. Under this nightmare scenario, the deflationary spiral worsens as consumers postpone purchasing since they expect prices to fall, thus further depressing demand.
Central bankers have held talks before on what steps to take in the event of deflation. But they've disagreed about whether to discuss in public the merits of using unorthodox options - including buying securities or other assets to boost demand - to help free an economy from the grip of deflation.
Some central bankers, mainly from the U.S. and Japan, have been willing to talk openly about what they would do under such circumstances. The Bank of Japan, in fact, has actually used such measures.
But European central bankers say the prospect of deflation, at least in Europe, is remote and hypothetical, and therefore public discussions of radical responses are simply alarmist.
Though the BIS doesn't publish agendas for the meetings it holds every other month, people close to the central bank for central banks say the disagreement over what to do in case of deflation could well be a topic of discussion at the bank's next meeting on Sept 8.
Frightening The Horses
Indeed, radical responses to deflation came up in the BIS annual report in June.
European central bankers told BIS officials afterwards that public airings of doomsday scenarios - even if couched in weighty economic terminology - weren't useful. The European Central Bank doesn't even say whether it is studying its options in case of deflation.
The European response to the BIS report was in the spirit of "I don't care what they do, as long as they don't do it in the street and frighten the horses,'" said a person close to the BIS, who declined to be named.
Most economists agree that central banks should be considering their options in the event of deflation, even if they only do so behind closed doors.
"It's 'Plan B,' isn't it?" said the person close to the BIS. "Even if you don't want to 'frighten the horses,' you might want to think your way through it. You surely should have someone thinking the unthinkable."
Joachim Scheide , head of the business cycle analysis department at the Kiel Institute for World Economics in Germany, said it's a central bank's job "to assure the stability of the financial system."
"The central bank is the key player if you have deflation," he added. "It can solve the problem, and if it doesn't do so then we have a real problem."
Not Entirely Theoretical
The probability of deflation, while low in most major economies, is still above zero. Japan, for example, has had persistent 1% deflation for the past five years. Mild deflation was also widely predicted for Germany earlier this summer, though it hasn't really come to pass.
A prolonged business slump in the U.S. has also caused Fed officials to worry openly that deflation could strike the U.S., more than 70 years after the last bout of American deflation during the Great Depression.
Last November, U.S. Federal Reserve governor Ben Bernanke electrified Fed watchers by saying that deflation was a possibility in the U.S., and that the Fed was weighing unorthodox options, including buying long-term bonds, in case it happens.
The Fed added further fuel to the fire when it said in May that deflation is every bit as worrisome as inflation. "The probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from a low level," the Fed said.
That, together with the Fed's earlier remarks about buying long term securities, sparked a temporary run on long-term bonds, as investors expected the Fed to use its huge purchasing clout in the bond market.
The Bank of Japan, meanwhile, was doing ineffective battle with deflation, adding to economists' concerns. BOJ measures, which included buying dollars to depreciate the yen and buying long-term securities, were not carried out decisively enough, Scheide said.
Ways And Means
The measures used by the BOJ and hinted at by the Fed are only a few samples of the collection of deflation-fighting options available to a central bank.
A first step for a central bank would be to consider buying anything from short- and long-term paper assets to real assets, including land and buildings.
"Generally speaking, a central bank these days would buy short-term government assets, such as overnight or 90-day notes," one economist said. "But going further and further out the yield curve is a possibility, and at the limit, a central bank could say, 'the longer bond rate is 3.5% and I think it should be 2.5%, and I am willing to buy every piece of paper that is out there to push the yield down to 2.5%, or to prevent it from going up."
That buying, though can have the unintended effect of causing bubbles in particular assets, without actually boosting demand for real goods and services, economists said.
Other options are equally fraught with problems. Devaluing a currency by buying up large quantities of another country's currency against it only works for one major economy at a time, because one country's currency depreciation is another country's appreciation, with corresponding impact on its ability to export and grow.
"If deflation hits many countries at the same time, then this option doesn't work," said Scheide.
Switzerland, which is approaching the "zero lower bound" of real interest rates, has considered currency depreciation as a way to encourage inflation. Switzerland is "small enough to be able to use such a measure without causing serious problems to other countries," the person close to the BIS said.
Another, slightly more Draconian, variant of this approach is for governments to tax bank deposits, or for central banks to impose fees on deposits when then are passed on to bank depositors. The aim would be to discourage individuals from saving, and encourage them to spend instead.
The so-called negative interest rate "is not so easy to implement," said Scheide.
Moreover, even with such a policy in place, it would be hard for governments and central banks to control where the money diverted from banks would flow instead.
"If all your bank deposits are taxable, you will see an incredible shift into cash, and that raises interesting questions about how banks respond," said the BIS watcher. "Banks have already lent that money [that is being withdrawn by depositors]. The effect could be like a run on the bank."
欧洲的经济梦魇假想
在宁静的巴塞尔，国际清算银行(Bank for International Settlement, 简称BIS)成员国之间将就一个问题再起争议－－那就是是否应考虑经济梦魇的问题。
这种梦魇不是一般意义上你死我活的争斗，而是在一个虚拟的世界中，许多经济体被物价下跌、需求疲软、资产价格走低和失业率居高不下所困扰。在这种情况下，消费者对物价下跌的预期导致通货紧缩加剧，从而进一步抑制了需求。
各国央行官员此前已就通货紧缩形势下将采取何种措施这一问题进行过讨论。但他们无法就如下问题达成一致：即是否公开讨论有无必要使用非常规手段，以帮助经济摆脱通货紧缩的困扰。非常规手段包括购买债券或其他资产，以提振需求等。 一些央行人士，主要是美国和日本央行的人士，一向愿意公开谈论在通货紧缩情况下其可能采取的举措。而日本央行(Bank of Japan)事实上已经采取了此类非常规措施。
但欧洲的央行官员称，通货紧缩的可能性至少在欧洲还很小，现在只是一个假设的问题，因此，公开讨论采取激进措施只会导致恐慌。
尽管BIS没有公布其每隔一月召开的会议的日程安排，接近该行的人士说，在BIS 9月8日的下次会议上，各方对通货紧缩情况下所应采取的措施很有可能成为议题之一。
事实上，BIS在其6月份的年度报告中已经提及针对通货紧采取激进措施的问题。
欧洲的央行官员此后对BIS官员说，公开谈论经济崩溃的问题，即便是辅之以大量的经济术语，这一做法不会收效。欧洲央行(ECB)甚至没有表示，其是否在就通货紧缩情况下ECB可能采取的措施进行研究。
一位不愿透露姓名的接近BIS的人士说，欧洲央行对BIS报告的反应就像人们所说的"我才不管其他人干什么，只要他们不在大街上做，不要让马受到惊吓就行。"。
多数经济学家认为，各国央行应当考虑通货紧缩情况下的政策选择，哪怕是以不公开的方式。
这位人士说，这只是一种备选方案。即使不想让马受惊，也需要考虑怎么办。肯定需要有人考虑不大可能出现的情况。 德国基尔大学世界经济研究所(Kiel Institute for World Economics)经济周期分析部门主任约阿金施奈德(Joachim Scheide)说，央行的责任就是确保金融系统的稳定。
他还说，在通货紧缩的情况下，央行将是一支重要力量。它可以解决这个问题，如果不能的话，那么问题就大了。
虽然多数经济大国出现通货紧缩的可能性很小，但这种可能性依然存在。比如，日本过去5年通货紧缩一直维持在1%。今夏早些时候人们曾预测德国将出现温和的通货紧缩，但最终没有发生。
美国商业持续不景气已让联邦储备委员会(Fed)官员公开表示，担心在大萧条(Great Depression)时代过去了70多年后，通货紧缩又可能重现。
去年11月份，Fed理事本?贝尔南克(Ben Bernanke)发出惊人之语。他宣称通货紧缩有可能会在美国出现，并称Fed正在权衡采用包括购买长期债券在内等非常规手段加以应对。
而更令观察家们感到意外的是，Fed今年5月份也表示通货紧缩同通货膨胀一样令人担忧。Fed称，通货膨胀率从业已较低的水平上大幅下降的可能性虽然很小，但仍超过了其进一步上升的可能性。
这些声音，加上Fed此前有关买入长期债券的言论，一度推动长期债券上扬，因为投资者预计Fed巨大的购买量将对债券市场产生影响。
同时，日本央行应对通货紧缩措施不力也加重了经济学家的担忧。施奈德称，日本央行对付通货紧缩的方法包括买入美元以令日圆贬值，以及买入长期债券等，但这些措施的实施都不够果断。
在众多可供央行选择的应对通货紧缩的方法中，日本央行所采取的方式和Fed所暗示的方式只是其中的一小部分。
央行的首要步骤应该是考虑买入长期和短期证券、不动产（包括地皮和楼盘）等资产。
一位经济学家称，通常来说，目前央行应买入短期政府资产，比如隔夜或90天期限票据。但是，由于收益率有进一步上扬的可能，达到极限水平时，央行可能会说："长期债券的收益率目前是3.5%，不过我认为它应该是2.5%，我将买入尽可能多的长期债券而将其收益率压低至2.5%，或是阻止其进一步上扬。"
经济学家称，这样的买入行为可能会使特定资产产生意想不到的泡沫，但不会真正提振市场对实际产品和服务的需求。
其他方法也同样存在问题。通过买入大量其他国家的货币从而使本国货币贬值的方法每次也只会对主要经济体奏效，因为一国货币贬值意味著另一国货币升值，会相应地影响其出口和经济增长的能力。
施奈德称，当通货紧缩同时侵袭许多国家时，这一方法便会失灵。
瑞士目前实际利率已接近零下限，该国已考虑通过货币贬值的方式来提高通货膨胀率。接近BIS的人士称，瑞士国家较小，能够采取这样的方式应付通缩，而同时又不会给他国带来严重的问题。
类似的另一种略为严厉的方式是政府对银行存款征税，或央行对存款收费，然后再转嫁给银行存款人。这样做的目的是减少个人存款，鼓励消费。
但施奈德称，这种所谓的负利率实施起来并不那么容易。
此外，即使这样的政策到位，政府和央行将很难控制从银行流出的资金的流向。
这位BIS观察员称，如果所有的银行存款都要上税，会有惊人数量的银行存款转为现金，此时银行该如何应对将会是一个有趣的问题，因为银行已经将存款人取出的存款贷出，这时可能会出现类似银行受到挤兑的情形。
